Berlin-based SOLON SE today presented its figures for the period ended June 30, 2011.
In the past quarter, business performance continued to be impacted by a weak market environment. In the period from April to June in particular, demand in Germany lagged significantly behind expectations. Against the backdrop of the nuclear energy debate, many customers appear to have deferred the purchase of solar systems or speculated on a further erosion of system prices.
In the persistently difficult market environment, SOLON generated Group revenue of €221.9 million in the first six months of the year, of which €156.7 million came from the second quarter. This represents an increase by 140% from the weak initial quarter of 2011. At the same time, revenues in the first half of 2011 were 8% lower year on year (H1 2010: €242.4 million). This means the company missed its revenue target for the first six months. Some 57% of sales revenues came from the power plant business in the first half of the year, and 79% were generated outside of Germany. SOLON produced photovoltaic systems with a total operating performance of 114 MW in the reporting period (H1 2010: 117 MW). As of June 30, 2011, SOLON had a total of 805 employees at various locations in Europe and the USA (December 31, 2010: 912).
The weak revenue performance also had a negative effect on the earnings side. As a consequence, the company posted an EBIT loss of €32.7 million (H1 2010: €2.3 million EBIT loss) and a €63.1 million net loss (H1 2010: €9.5 million net loss). This corresponds to a net loss per share of €3.66 (H1 2010: €0.73 net loss). Net financing expenses amounted to €32.7 million in the reporting period (H1 2010: net financing expense of €11.5 million). Alongside higher interest expenses, it included special effects in the amount of €18.0 million related to the insolvency of the Austrian cell manufacturer Blue Chip Energy GmbH (full impairment loss on a shareholder loan and the interest on it).
Against the backdrop of the weak business performance, net debt as of June 30, 2011 remained high at €402.4 million (March 31, 2011: €402.1 million). Working capital decreased by €28.7 million to €184.3 million (March 31, 2011:€213.0 million), which represents a working capital ratio of 31% in relation to revenues of the past twelve months. Receivables due as of June 30, 2011 declined by €17.1 million to €131.3 million from the prior quarter (March 31, 2011: €148.4 million). Inventories of finished and unfinished goods dropped to €142.0 million as of June 30, 2011, due to forced sales accompanied by an adjustment of production planning (March 31, 2011: €160.3 million).
The business trend in the current quarter indicates a noticeable revival of demand in Germany. First signs of recovery are evident in Italy, too, at least in the industrial rooftop segment, which in contrast to large greenfield installations still offers attractive returns under the new Italian feed-in law. As a provider of a number of photovoltaic systems tailored for this segment, SOLON is well prepared for the changed market conditions in Italy.
Considering the uncertainty regarding the speed of the expected market recovery in the primary markets of Germany and Italy, however, SOLON management does not at this point expect to offset the revenues lost in the first six months by the end of the current year. Accordingly, it confirmed its recently adjusted revenue and earnings outlook. For the year as a whole, Group revenue is now expected to be around €500 million, with a significant net loss and EBIT loss.
In response to the weak operating performance, management stepped up the ongoing restructuring measures. In this context, additional cost reduction potentials in the double-digit millions were identified in cooperation with experienced consultants; they are now being implemented as priorities with the objective of adapting cost structures to the changed conditions as quickly as possible and hence strengthening the competitiveness of SOLON in this difficult market environment. SOLON management is also engaged in intensive negotiations with the lending banks and guarantors regarding the restructuring of corporate financing and is confident that these negotiations will be successfully concluded in the course of the fourth quarter.
The complete interim report of SOLON SE for the quarter ended June 30, 2011, is available for download from the company’s website (www.solon.com).